A bill that was meant to help close this year’s budget also handed out more than $100 million in future tax breaks.
Pennsylvania legislators closed a $1.3 billion budget gap in the 2016-17 budget by piecing together many different forms of revenue. They increased taxes on cigarettes and other tobacco products, and applied the state’s sales tax to the digital download of movies, books and video games, which weren’t taxed before. They also borrowed $200 million from a state medical malpractice fund. The budget further depends on $100 million from legalizing Internet gambling, which the Legislature will work on in the fall.
Lost in the shuffle of House Bill 1198, and its immediate tax increases, were the eight new business tax credits that will start in the 2017-18 fiscal year.
All of these tax credits will begin July 1, 2017:
- Rural jobs and investment: $100 million to attract businesses and create jobs in rural areas of the state
- Concert rehearsal and tour: $4 million to reimburse concert promotion and management companies for qualifying tour expenses
- Manufacturing and investment: $4 million to benefit companies that create and maintain at least $1 million in new jobs for five years
- Mixed-use development: $2 million to increase affordable housing and commercial development
- Waterfront development: $1.5 million to improve the public’s access to waterfront areas
- Video game production: $1 million to aid Pennsylvania companies in the development of video games
These new tax credits come with various conditions that business have to meet in order to qualify.
Beginning this fiscal year, there will also be a $7.5 million coal refuse energy and reclamation tax credit that will rise to $10 million each year after that. It will be given out to companies that use coal waste refuse as an energy source, according to PennLive.
The film production tax credit will now be capped at $65 million, as opposed to $60 million. If 60 percent of a film’s budget is spent in Pennsylvania, the project is eligible for a 25 percent tax credit on those qualifying expenses. This budget bill adds a 30 percent tax credit for postproduction expenses, which had previously not been covered by the program.
There are also new sales tax exemptions for the snack food industry to purchase cardboard boxes and the purchase of machinery and equipment used in the timber industry.